It can be a great way to protect your heirs – or a giant waste of your savings. Here’s how to tell which.

(Money Magazine) — It’s not alarmist to think that you’ll need long-term care in your lifetime. Among Americans who reach their 65th birthday, 45% will have to pay for some kind of long-term-care services, according to the actuarial firm Milliman.

Yet the decision whether to buy a long-term-care insurance policy, which pays out for nursing-home and certain at-home care, is one of the toughest calls you’ll ever have to make. Insurance could preserve your estate for your heirs and save incredible heartache. On the other hand, it’s expensive and chances are you won’t need it.

Unlike most stories you’ll read in Money Magazine, this one won’t give you a definitive answer. But we’ll tell you what to consider as you weigh your comfort level with playing the odds.

Strictly by the numbers

There’s no question that years in a nursing home can decimate your savings. The average facility now costs $213 a day, according to a MetLife survey; based on last year’s 3% yearly price increase, by 2030 you can expect to pay $408 a day, or $148,967 a year. For a 2½-year average stay, the tab would be about $372,000.

The chances that you’ll need that much care, however, are small. Only 9% of 65-year-olds can expect a lengthy nursing-home stay, according to Milliman (another 18% will need long-term assisted-living care).

But even a long-term stay could be a matter of months, not years. Suppose you’re a healthy 58-year-old. You’d pay at least $1,000 a year for a policy with a $150 daily benefit that adjusts for inflation each year.

Invest that money instead and you’ll end up with $65,330 at age 80 (assuming 8% annual returns). While that wouldn’t even cover six months in a nursing home in 2030, it’s money you can spend or leave to your heirs if you never need long-term care.

But wait…

What if a debilitating illness runs in your family? In that case, your odds of needing expensive long-term care increase. Or perhaps you want the peace of mind of knowing that a lengthy nursing-home stay wouldn’t financially devastate your spouse or your kids.

Even if you feel that you’re a candidate for this insurance, you have to confront the policies’ expense. Don’t buy unless you can afford a premium hike of 10% to 20% and can continue to make payments for 30 or so years.

A good rule of thumb: Spend no more than 7% of your income on premiums. And keep in mind that the average $1,000-a-year policy pays $150 a day, only 70% of the typical cost of care today.

If you want to avoid a shortfall – or if nursing- home costs are high in your area – you may need a more expensive policy. And if you can’t pay at any point, you’ll likely be left with no coverage at all. Then the money would really have been wasted.

Keep in mind

If you want to purchase long-term-care insurance, get the maximum flexibility you can afford. To keep your premium down, pick a 90-day elimination period (the long-term-care version of a deductible). But opt for 5% yearly “compounding” inflation, which costs more but will ensure that your coverage keeps up with price hikes. And keep saving – even if you have insurance, you’ll wind up paying for a portion of your care.